DP8108 Trends in Quality Adjusted Skill Premia in the US, 1960-2000

Author(s): Pedro Carneiro, Sokbae Lee
Publication Date: November 2010
Keyword(s): College Premium, Composition Effects, Inequality
JEL(s): J0
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8108

This paper presents new evidence that increases in college enrollment lead to a decline in the average quality of college graduates between 1960 and 2000, resulting in a decrease of 6 percentage points in the college premium. We show that although a standard demand and supply framework can qualitatively account for the trend in the college and age premia over this period, substantial quantitative adjustments still need to be made to account for changes in quality.